What Is Confidential Information Memorandum? | Agency M&A Definition
A confidential information memorandum (CIM) is a comprehensive document prepared by the seller or their advisor that provides detailed information about a business being offered for sale. Also called an offering memorandum or information memorandum, it is shared only with prospective buyers who have signed a non-disclosure agreement and serves as the primary marketing document for the transaction.
Confidential Information Memorandum in Agency M&A
For marketing agency sales, the CIM is where the seller makes their most persuasive case for why the agency is worth buying. A thorough agency CIM typically runs 30-60 pages and covers the agency’s history and founding story, detailed service offerings and case studies (anonymized if needed), organizational chart with key personnel bios, three to five years of historical financial statements, client roster with revenue by client and contract terms, revenue mix between retainer and project work, employee compensation summary, technology stack and proprietary tools, market positioning and competitive landscape, and growth opportunities the buyer could pursue. The CIM walks a careful line between advocacy and accuracy. It should present the agency in its best light while remaining truthful, because every claim will be verified during due diligence. Experienced buyers read dozens of CIMs per year and can immediately spot inflated projections or vague financial presentations. Agency-specific CIMs should prominently feature net revenue (excluding pass-through media spend), client retention rates, and average revenue per client — metrics that matter most to agency acquirers. The cost of preparing a professional CIM through an M&A advisor typically ranges from $10,000-$25,000, though many advisors include it in their success fee arrangement.
How Confidential Information Memorandum Affects Agency Valuation
The CIM is the most important pre-offer document in the sale process because it shapes every buyer’s initial perception of value. Agencies whose CIMs clearly present normalized EBITDA with well-documented add-backs, demonstrate revenue durability through high retention rates and long-term contracts, and articulate a believable growth story consistently receive higher initial offers. A CIM that presents a clear path from $500,000 EBITDA to $750,000 EBITDA through specific, actionable growth levers — not vague aspirations — can justify a buyer paying a premium multiple for future upside. Conversely, CIMs with disorganized financials, missing data, or overly aggressive projections signal risk and invite lowball offers. The difference between a well-prepared and poorly prepared CIM can be 0.5-1.5x on the final multiple. For a $600,000 EBITDA agency, that translates to $300,000 to $900,000 in deal value.
Example
A HubSpot partner agency generating $2.6 million in revenue and $520,000 in adjusted EBITDA prepares a 45-page CIM with their M&A advisor. The document features a detailed breakdown of revenue: 68% from retainers averaging $8,500/month per client, 22% from implementation projects, and 10% from training workshops. It showcases a 92% annual client retention rate, an average client tenure of 3.2 years, and a pipeline of $340,000 in qualified new business opportunities. The financial section presents three years of P&L statements with clearly documented add-backs totaling $135,000 annually. Six buyers submit offers after reviewing the CIM. The winning bid comes in at 6.5x adjusted EBITDA ($3.38 million) — the buyer later noted that the retention metrics and documented growth pipeline in the CIM gave them confidence to bid above their initial 5.5x ceiling.
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